Appraiser Marked Private Septic And Well As Public

[Huds_Harm]

The appraiser on the property I purchased with an FHA loan marked my water and sewer as public therefore the required FHA tests and minimum distance requirements were not performed. The system has not only failed it will cost upwards of 60k to bring up to health and safety standards due to the size of the lot and having to move the well. The property does not qualify for a FHA loan due to the distance from the septic to the well as is being only 40ft. Any advice on who is liable?

 

[Russ Kitzberger]

It depends on the situation, basically you need an attorney.

In a negligence claim, an expert would investigate if the appraiser had data or indication from the site viewing to indicate it was public or if they should have had information to indicate differently.
Secondarily, it depends on the limiting conditions of the appraisal report if this was a barrier to clear title or a survey was required to notice the condition; that may have been a limiting condition. Finally, you might have to establish a diminution in value rather than a cost to repair. Again, legal question. These items you could hire an attorney and an expert appraisal witness to investigate.

Finally, you may have had a duty to mitigate, that is a legal question. IE you received a copy of the report prior to closing, however closed anyway even though you knew (or should have known) it was wrong. Duty to mitigate differs from jurisdiction to jurisdiction; Ask an attorney.

 

[Huds_Harm]

T

It depends on the situation, basically you need an attorney.

In a negligence claim, an expert would investigate if the appraiser had data or indication from the site viewing to indicate it was public or if they should have had information to indicate differently.
Secondarily, it depends on the limiting conditions of the appraisal report if this was a barrier to clear title or a survey was required to notice the condition; that may have been a limiting condition. Finally, you might have to establish a diminution in value rather than a cost to repair. Again, legal question. These items you could hire an attorney and an expert appraisal witness to investigate.

Finally, you may have had a duty to mitigate, that is a legal question. IE you received a copy of the report prior to closing, however closed anyway even though you knew (or should have known) it was wrong. Duty to mitigate differs from jurisdiction to jurisdiction; Ask an attorney.

Thank you. I think the lender is liable to review the accuracy of the appraisal.

4155.2 4.1.b Lender Responsibility for Appraisals
Lenders, including sponsoring lenders, are equally responsible, along with appraisers, for the quality, integrity, accuracy and thoroughness of appraisals. The lender will be held accountable if it knew, or should have known, that there were problems with the integrity, accuracy and thoroughness of an appraisal submitted to FHA for mortgage insurance purposes. Lenders that submit appraisals to HUD that do not meet FHA requirements are subject to the imposition of sanctions by the HUD Mortgagee Review Board (MRB).

 

[glenn walker]

The appraiser on my property marked my water and sewer as public therefore the required FHA tests and minimum distance requirements were not performed. The system has not only failed it will cost upwards of 60k to bring up to health and safety standards due to the size of the lot and having to move the well. The property does not qualify for a FHA loan due to the distance from the septic to the well as is being only 40ft. Any advice on who is liable?

You got it backwards If it's checked as (Public then that means it would not be on a septic and well ) and there would be no issue. If he marked as being on Private Sepic and Water then the Underwriter would request inspections etc. As who is liable ? Nobody if the appraiser thought it was on Public Sewer and water he made an-error but that error did not change the fact your property is on Septic and a Private well and its FHA Guidelines. From a legal point of view normally a person has to prove they had suffered monetary damages and in this case there is no damages and you just have to go under a different loan program.

 

[Huds_Harm]

You got it backwards If it's checked as (Public then that means it would not be on a septic and well ) and there would be no issue. If he marked as being on Private Sepic and Water then the Underwriter would request inspections etc. As who is liable ? Nobody if the appraiser thought it was on Public Sewer and water he made an-error but that error did not change the fact your property is on Septic and a Private well and its FHA Guidelines. From a legal point of view normally a person has to prove they had suffered monetary damages and in this case there is no damages and you just have to go under a different loan program.

Correct if it were marked as private and not public they would have required the tests to prove the home does not qualify.

 

[Dublin ohio]

The property does not qualify for a FHA loan due to the distance from the septic to the well as is being only 40ft. Any advice on who is liable?

The tests you are referring to are not necessarily just for FHA and can be done for any loan. But appraiser typically will not call for inspection. Unless they have some indication of a problem on the surface. Why would FHA testing protocols be necessary if the property is not eligible for FHA loan?

 

[Russ Kitzberger]

Thank you. I think the lender is liable to review the accuracy of the appraisal.

Perhaps; It is all situational, they might not be liable to you, might be liable to FHA. Again, ask an attorney. What I would see on my end as the expert, the client would use discovery as part of the legal process to get information, or you can enter into voluntary mediation or arbitration then you can get the information to me and perhaps an underwriting expert to do a full investigation.

Ask an attorney how much that will cost and what the possible outcomes are make your decision from there.

 

[Dublin ohio]

The appraiser on my property marked my water and sewer as public

The above is very interesting. I think it could be an issue for the appraiser IF the lender would typically require tests if marked private. Since it did not qualify for FHA. Did you go conventional or are you the seller?

 

[Huds_Harm]

The tests you are referring to are not necessarily just for FHA and can be done for any loan. But appraiser typically will not call for inspection. Unless they have some indication of a problem on the surface. Why would FHA testing protocols be necessary if the property is not eligible for FHA loan?

The test were required but we’re not performed due to it being marked as public. The home does not meet the minimum 50ft distance between the two.

 

[Huds_Harm]

The above is very interesting. I think it could be an issue for the appraiser IF the lender would typically require tests if marked private. Since it did not qualify for FHA. Did you go conventional or are you the seller?

I am the buyer and the lender closed as an FHA loan